7 frontières pour atteindre les objectifs sociaux. Les décisions restent soumises à des influences nationales car la propriété et les directions centrales demeurent uninationales. «Une entreprise transnationale est une société multinationale gérée (et) possédée par des personnes d'origines nationales différentes. De ce fait les décisions échappent à l'optique nationale. «Une entreprise supranationale est une entreprise transnationale juridiquement dénationalisée du fait qu'il lui est permis de se faire enregistrer exclusivement auprès d'un organisme international créé par une convention internationale qui la contrôle et auquel elle paie des impôts». Enfin, le professeur canadien Kindelbergar a estimé que, contrairement aux définitions un peu lourdes cidessus, l'usage s'est arrêté sur trois termes : les entreprises nationales opérant à l'étranger ; les entreprises multinationales ; la Société Internationale. Dans le premier cas, l'accent est mis «sur la primauté des méthodes utilisées dans le pays du siège et même des lois de ce pays» ; la seconde est - une société multinationale authentique, sensible aux traditions locales et respectant tes souverainetés et les politiques locales». La troisième est globale * avec des opérations si fluides que, pratiquement, elles ne sont plus à la portée des politiques nationales d'aucun pays, ce qui la laisse libre dans une certaine mesure de prendre des décisions dans le seul Intérêt de la société». De son côté, la presse économique et financière utilise couramment deux critères pour qualifier les Sociétés internationales : d'une part, le nombre important de pays où la production est effectuée et d'autre part, ce qui est tout à fait pertinent, le pourcentage des «actifs» à l'étranger de la Société ou à défaut, les chiffres en la matière étant rarement disponibles, le pourcentage «étranger» du chiffre d'affaires ou de la main-d'œuvre employée, les sociétés ne sont pas toujours disposées ou promptes à révéler ces données ; seules certaines sociétés américaines le font. Selon «Fortune» (1965), soixante dix-sept compagnies américaines (sur les cinq cents plus importantes) avaient 25 % ou plus de leurs actifs, résultats, production ou main-d'œuvre à l'étranger, et cent quatrevingt dix-neuf firmes en avaient 10 % ou plus. Ces critères ont un double avantage : d'abord ils permettent de ne pas considérer comme Société internationale une entreprise qui se borne à n'avoir que quelques rares filiales ne représentant qu'un pourcentage dérisoire du chiffre d'affaires ; en revanche, ils permettent de considérer comme internationale une Société n'ayant peutêtre qu'une filiale ou centre d'exploitation à l'étranger, mais y réalisant parfois la quasi totalité de son chiffre d'affaires. Tel pourrait être le cas d'une société dont le siège central serait installé à New York, Londres ou Paris, et qui aurait pour objet d'exploiter une mine ou une plantation en dehors des frontières. Extrait de l'étude sur «Les Sociétés Internationales». «Notes et études documentaires» N , 20 juillet, La documentation française. As previous national Intégration " A case can be made that the development of the large international corporation in the 20th century will prove in the long run to be a more effective device for equalizing wages, rents and interest rates throughout the world than trade conducted in competitive markets by small merchants. The analogy is with the national corporations which in the United States after about 1890 helped to equalize wage's, interest rates and rents within the country's borders by borrowing in the cheapest markets (New York) and investing where it was most productive in terms of costs and markets. The resultant movement of capital and shift in demand for labor was probably more effective in, say, raising wages in the South and lowering interest rates there than either trade by local companies or the limited direct movement of factors. Charles Kindleberg. International Economics ed. Not So Multinational, After All JOHN THACKRAY In the past couple of years, the notion of the multinational corporation has been fashionably popular among big business executives; though they use the term "multinational" with some vagueness and imprecision as to Its meaning, or as to what it should mean. To some executives in big business it is a present reality; to others it is not yet in existence, but only at the development stage; to some it is measured by the degree of foreign profit a company has; to others it is measured by the number of foreign manufacturing plants a company has; to still others a company is or is not multinational depending on an attitude of mind on the part of management." Regardless of the exact meaning attributed to the term, it is universally liked. Multinational is a word with, for businessmen, a pleasantly expansionist ring to it; with intimation of new, widening horizons, greater and greater conquests ahead. Perhaps it also invokes a suggestion of imperial, corporate majesty. Interviews with a number of international big businessmen also suggest that for them the idea of the multinational company connotes what might lightly be called the "United Nations syndrome" the hopeful notion that the international industrial corporation is going out to embrace the peoples of the world, to bring them together! in its ample bosom and thus work against the spirits of nationalism that disturb the peace of our world. In their wilder moments such businessmen dream of a world corporate order which is harmonious, technologically brilliant and beneficent Some of this optimism may be slightly misplaced. While multinational companies will doubtless continue to reach out for greater expansion in those countries where they operate, and to march into new territories, it is by no means certain that they will evolve into institutions that are truly internationalist in spirit, in fact and, especially, in management, which almost none of them is at present John Thackray is the US correspondent of the British magazine Management Today. INTERPLAY/NOVEMBER ASSOCIATIONS INTERNATIONALES, 1972

8 Not a new phenomenon, but... International business operations of this kind are not, of course, a new phenomenon on the world economic scene. The first wave of foreign investment by manufacturing companies began in the closing decades of the nineteenth century, and continued, gathering strength, up to Much of it was American, not only in Canada, where the introduction in 1879 of a protective tariff expressly designed to promote the growth of Canadian manufacturing industry acted as a major stimulus to United States companies, but also in Europe. Then, as now, this American investment tended to be concentrated in the technologically-advanced growth industries, such as specialised machinery, office equipment, automobiles and carbon black. A few European companies were also beginning to expand abroad : Lever set up his first soap factory outside Britain in 1899, and Alfred Nobel was establishing armaments factories all over Europe. (Excerpt from the article «The International Corporation > by Caroline M. Miles, in International Affairs, April, 1969). Les vraies fusions européennes THE MULTI NATIONAL CORPORATION The multinational corporation has been hailed by some as a benevolent agent of economic integration, leading ultimately to a key role in the new world order that it prefigures, and by others as a malevolent agent of political imperialism which seeks to keep great sections of mankind confined in abject poverty for the benefit of the affluent few in North America. Neither extreme describes the real situation, but there is enough truth in each case to make the multinational corporation an object of great interest and concern to world federalists. Is the multinational corporation friend or foe to the world federalist movement? The ' question is explored in the following articles. The first examines the nature of the corporation, defining its limits and potential, and suggests means of achieving the latter. The second makes no direct reference to the corporation but presents a general attitude that world corporations will have to come to terms with. And the third and last article seeks to define the conflict that emerges when corporate structures meet that attitude. The great potential of world corporations, for both good and bad, is examined. All viewpoints are offered as further contributions to the continuing debate of multinational corporations in federalist circles a debate that will culminate with the publication of a policy pamphlet as recommended and authorized by the 14th World Congress of WAWF. The Editor INTERNATIONAL ASSOCIATIONS,

11 The Multinational Company and the International Executive* Prof. Or Ing. D.N. CHORAFAS ** Perfection in the preparation, daring in the execution, submission to the facts, and impartiality in regard to his own thoughts, will be found in varying degrees with all industrial leaders who left a name behind themselves and their acts. Under the same perspective, we should examine the question * This lecture is based on a 1966 research project involving twenty-four countries in four continents. A total of one hundred eighty-eight companies participated in this research which was sponsored by the American Management Association of New York. The Complete report is published by AMA under the title: DEVELOP- ING THE INTERNATIONAL MANAGER. ** Dr Choratas is an independent consultant to several large international firms. He is also a thember of the faculty of the Centre d Etudes industrielles, Geneva. of the international staff; its selection, its development, and the evaluation of its accomplishments. International business needs fewer fireworks and more forward loo king management principles. No stereotype, general purpose headlines can help in a world-wide basis. Each organization has a character of its own, established through cumulative executive attitude, the elements of behavioral conditions and the passage of time. The same is true about each country and each area in the world. "The best men for international operations", remarked a senior Japanese executive, "are those who know how to choose, how to coach, and how to control the men under their authority. Gauging one's own subordinates is in itself a mark of service-mindedness, and In the years ahead services are bound to be much more important in international industrial operations, than products". A senior French executive believes that the International managers currently in existence can be divided Into two broad, mostly opposite categories : (1) those who think and act like statesmen; (2) those who are nothing more than supermarket merchants. This classification in Itself identifies the large differences In human personality. Differences which can be traced to a man s own fundamental background, his training and his experience. The sheer complexity of international operations demands men of special timber. But what makes International operations so unique? As Professor Albert Prinzlng rightly pointed out : "Many companies today considering themselves to be international are not realty so in the full sense of the word. A good deal of them are essentially national companies able to fill the capabilities of the world-wide market through exports. It takes more than that to make a true multinational combine. An international company must be sensitive to multinational markets. Some of the companies which think today as fitting the international framework, are not even national in their way of mind, they are just provincial. And as long as they keep running in that frame they are destined to fail In their international undertaking. Provincial companies are Introvert, in contrast to international business which requires the most of extroverts". This fairly sums up the mainstream of executive reactions. It is a broad way of summarizing; a way engulfing In itself some of the most significant thoughts and opinions we got in the course of our research. It took some miles by jet, to visit four continents, some twenty-four countries in all. This was necessary in order to meet a valid sample of cognizant executives and to collect the appropriate research data. Just conceivably we might have kept the research In the big cities : New York, Tokyo. Frankfurt, London. Paris, Milan. This would have been the easiest path. But since the beginning we felt that we had to meet the people with the problems, down at the ground floor of the corporate operations. Not just the decision-making men, at the headquarters. The men running the faraway operations are those securing the tactical successes that will carry the company safely through the fierce competition of the years ahead. The merit of knowing what both parties (at the headquarters and at the operations level) think, is that it makes the reasoning so less speculative. This approach was necessary if we were going to present a valid synthesis on the international management profession. The development of the international executive cannot be done in abstract The facts have to be recorded, however briefly, if the reader is to get the balance right Our research at the ground floor was not in vain. Headlines were made by expressions of disappointment and thoughts of withdrawal. International industrial executives, many of them restless, would like to know why their profession has not been structured yet. It is only normal that the headquarters of multinational companies, from their part, would like to obtain efficiency in the operations abroad. It is meaningless to talk about the development of skill in international industrial operations before solidly defining what is meant by "international industrial operations". This is particulary important since the thinking on the matter is confused even if the aim is clear. To help in a better understanding of this basic, even if intractable, problem of how to provide education and training for international executives, we will give two definitions to answer the subject question. One will stress on men who make up the living matter of the corporation; the prime movers behind its growth and survival. The others concerns the organization and industrial framework of the company itself. Things would indeed be quite simple if the international executive Job were what various people have in the past tried to make it: that is merely the top job in a hierarchy of tape-bound men, charged with translating and 78 ASSOCIATIONS INTERNATIONALES, 1972

14 Intéret des peuples et «fair play». La principale question que l on doit se poser est de savoir si ce rayonnement des grandes entreprises surtout, mais aussi d'entreprises plus modestes, est ou non conforme a l'intéret des Etats et des peuples chez lesquels elles s'installent. Les conclusions a cet égard du Comité spécial, pour rester assez générales, sont dans l'ensemble nettement positives. Il n'est pas douteux qu'un pays a grand avantage, dans la phase actuelle, si accélérée, de la civilisation industrielle, a connaître et a utiliser des techniques sans cesse perfectionnées. Mais cette osmose technologique, pour porter tous ses fruits, exige, a la fois chez l'etat qui accueille et chez l'entreprise qui est accueillie, beaucoup de compréhension réciproque et, pour tout dire en un mot, beaucoup de «fair play». Ainsi définies sommairement et approximativement mesurées, les Sociétés internationales sont de toute évidence aux prises avec des problemes qu'ignorent les sociétés purement nationales. Non pas qu'elles ne relevent de par leur origine et de par leur base, ou, si l'on préfere, de par leur quartier général, d'un pays déterminé. Ce serait verser dans le mythe que d'y voir des forces échappant a tout contrôle. La vérité est au contraire qu'assumant des tâches productrices dans des nations ayant chacune sa juridiction, elles doivent assurer dans le respect de législations et de coutumes différentes, la poursuite de leurs objectifs spécifiques, le développement de leurs activités... (extraits de l'allocution de M. Wilfrid S. Baumgartner (France) Président du Comité Spécial de la Société International de la CIl, Président Rhône- Poulnec SA., a l'ouverture du XXII Congres de la Chambre de Commerce Internationale, 1969). Copyright International Chamber of Commerce, SOCIAL ARCHITECTURAL PROBLEMS OF THE Multinational Firm * Howard V. Perlmutter** "The dizzy progress of science, theoretical and practical has depended on the existence of a fellowship of scientists which is free, uninhibited and communicative. It is not an upstart society, for it derives its traditions, both of scholarship and of service, from roots which reach through the Renaissance into the monastic community and the first universities. The men and workers who practice the sciences make a company of scholars which has been more lasting than any modern state, yet which has changed and evolved as no church has..." Bronowski 1 ) It is a truism to say that the structures of the world community are changing. Political alliances, ideological movements for peace, supranational secretariate, are evidence of this dynamic process. But whether the world is becoming more of a "community" Is another question, perhaps beat left to on essay with a more philosophical * The french version of this article appeared In the Revue économique et sociale, Lausanne. April 1967 ** Formerly Professor of IMEDE (Institut pour l Etude de Methodes de Direction de l Entreprise), Lausanne, from ; has taught and conducted research at Massachusetts Institute of Technology and Yale University. purpose. There is evidence that more Intergovernmental and private International associations are coming Into existence. The Increase in listings of International associations in Geneva and Brussels, in New York and Paris, is impressive. 2 ) However, an Important question is: Are the international structures which are emerging related In a primary way to man's basic needs, his dairy quest for food and shelter? How are the new structures of the international economy related to the organisation of men, capital, raw materials, techniques. to meet consumer needs? Which of these structures is becoming considered both viable and indispensable by citizens and leaders of the nation state? Are there transnational processes which are generating essentially new structures and new communication networks concerned with providing not only work for people of different national cultures but integrating the fruits of these labours for the purpose of satisfying consumers Inside and outside the nation state? At the risk of judging prematurely what Is still a rather primitive economic activity, we shall try to examine how some aspects of the multinational firm can be understood as en outcome of new forces in the world today. The evidence that the multinational firm is Increasing in numbers is impressive. The prospects for the increasing importance of this kind of company are considered great. At the extreme, it is predicted that within forty years the only surviving large industries will be multinational 3 ). If this is possible. the consequence for the gradual Internationalisation (but not necessarily a reduction in influence) of the nation state is rather optimistic at least on first sight. For if an Increasing proportion of the world s population is gaining their livelihood In companies which are multinational m their missions, wo can begin to Imagine that the term "world community" will gain more than Its present literary stature. TOWARDS A SOCIAL ARCHITECTURE OF THE MULTINATIONAL ENTERPRISE In this essay we shall devote our attention to the social architecture of multinational enterprise. Our aim is to show how conflict I» managed between the multinational firm and the nation states in which they are located. CONCLUSION In discussing the social architecture of multinational enterprises we have come to observe that some firms are moving, consciously or not. towards the organisation of science and technology in the world community by creating subinstitutions in a f i r m which embodies such values as the creation and sharing of wealth, the distribution of skills and knowledge, the creating and sharing of power, the respect for individual dignity, end justice for all persons regardless of their national background, all values associated with creating an efficient enterprise aimed at producing and making available goods and services needed and deseed by all persons In the world at good quality and a f a i r price. If this emerging kind of structure doe» become viable and if it is percelved as indispensable to the growth of all sovereign states, irrespective of ideological background, it could qualify as a new candidate for a world community which is still in a state of becoming. INTERNATIONAL ASSOCIATIONS,

16 II y a désormais une zone d intérêts et de préoccupations commune aux firmes internationales et au système des Nations Unies une zone dont les dimensions sont déjà suffisantes pour que nous cherchions des rapports plus étroits que par le passé. Par nos analyses et nos contacts,. par nos programmes d action, nous sommes devenus plus conscients des besoins et des critères du monde des affaires, plus aptes à comprendre les méthodes et les réactions de l'entreprise Le monde des affaires doit à son tour prendre plus directement conscience des efforts de notre institution, de tout ce qu'elle peut accomplir pourvu qu'elle soit suffisamment soutenue The Developing Countries and the International Corporation V. by Dr. BHARAT RAM (India) Chairman, Delhi Cloth and General Mills Co. Ltd. (extrait de l'allocution de M. Philippe de Seynes. Secretaire general adjoint de l'organisation des Nations Unies aux Affaires Economiques et Sociales, au XXII Congrès, de la Chambre de Commerce Internationale, 1969.) COMMITTEE V concerned itself with how the international corporation can function with profit, and at the same time promote faster economic growth in less-developed countries. I must thank all the participants and reiterate my regret that I had to apply the guillotine on the lively discussions due to shortage of time. The role of the international corporation was discussed against the backdrop of remedying the growing disparities between the developing and the developed countries, and in particular of accelerating the rapid growth of the developing industries. In this context it was only natural that an assessment was attempted of how the international corporation could be a means of progress and a source of inspiration to the lessdeveloped countries of thé world. Theoretically we were faced with a choice between three directions : one path is to wholeheartedly accept the international corporation on such terms as it chooses or fancies to dictate; the second is to set our face wholly against this form of enterprise; the third, the middle course, is to try to reconcile the interests of the international corporation and those of the developing countries. As good businessmen, the representatives of both the developed and developing countries agreed that such reconciliation should be made, and what is more important, that it is possible to make it, provided there are both business prospects and an understanding of each other's problems. I believe it was recognised in the Committee that the countries in the lessdeveloped world were at various stages of development and that, therefore, it might not be possible to come to conclusions in detail as to what should or should not be done by the international corporation on the one hand, and the host country on the other hand. This, of course, should not preclude the drawing up of guidelines of a general nature. The developing countries are trying to modernise their economic and social infrastructures as well as their administrative machinery. They are prepared to accept new ideas and new forms of organisation, but they are hesitant to accept anything that threatens to place them in a dependent position. Maybe, if they choose the less efficient methods, they may be really placed in a dependent position. This is what has to be thought about clearly and energetically. (Excerpt from a statement at the XXlIth Congress of the International Chamber of Commerce, 1969), INTERNATIONAL ASSOCIATIONS,

17 Potentialities of Business as an International Force from «International Business; Environment and Adaptation, by Blough Roy. New York, McGraw-Hill, The multinational corporation is in an excellent position to promote the economic development of the less developed countries. It has the financial strength and broad spread of risks among many countries that enable it to make sound and profitable investments which for less broadly based companies would be so risky as to be foolhardy. It has access to knowledge not only from the industrial home base but also from other developing countries in which it is working; it thus has a store of technological, managerial, and other knowledge and skills that are likely to be better adapted to the needs of the less developed countries than is the knowledge of business firms that have access only to home-country technology. The multinational corporation can use its international communications system to help countries achieve the benefits of cooperation. It can provide, through its own distribution system or its market contacts, foreign markets, the lack of which is one of the major obstacles to the development of export trade by the developing countries, especially im manufacturing. For example, the corporation can integrate its operations in a number of countries; in the automobile industry the corporation's plants in several countries can specialize in producing different component parts which can be exchanged among countries, with final assembly taking place in perhaps each of the countries for the local market. What the multinational corporation can do to promote economic development is not necessarily what it will do. A business corporation is not an eleemosynary institution, and its economic interests may lead it to oppose development of an industry in a country in order to maintain its markets for the goods it is producing elsewhere. It can play one country off against another in the hope of securing highly favorable taxation and other terms for projected new investment. It can sh ift production for international markets from plants in one country to those in another country either for business reasons or to bring pressure to bear for some concession or for modification of some regulation. By changes of interaffiliate pricing it can shift the distribution of profit among countries or evade restrictions on capital flows. Its size and broad distribution of risks give it the ability to wait, if that is needed in the negotiating process. It is sometimes argued that the growth of a sense of public responsibility among multinational corporations will be such that the will serve as «trustees» of the public welfare. It is of course true that everyone must be a trustee; each of us must be trusted to do many things that are in the public interest and to avoid doing many things that would be antagonistic to it. Unless legal authority is supported by a very general degree of compliance and cooperation, the business system and society must collapse. The size and breadth of interest of the multinational corporations give them a broader international viewpoint and greater leeway in which to follow it than may be true of smaller firms. However, it is well to remember that a trustee behaves as if he believes someone is continually looking over his shoulder cheeking his performance and experience with trustees proves how important it is that there actually be that someone looking over his shoulder. Moreover, the emphases that are common in private enterprise on the importance of profit, on the view that «business is business,» on the axions that «nice guys finish last» and «the meek shall unherit six feet of earth,» these are powerful ideas not in harmony with the trustee concept, while personal greed and love of power are too much a part of man's nature to be ignored. Rower carries with it the danger of the misuse of power; the corrupting qualities of power are not limited to political power; economic power also corrupts. There is of course the threat of competition for any business firm that presses too hard or goes too far. Actual or potential competing business firms commonly are waiting to offer more favorable arrangements when the prospects are favorable. Yet the historically minded observer cannot overlook the long history of agreements among business firms to suppress competition. The argument that competition among giants can be relied on to prevent misuse of economic power is not convincing. Given an increasing number of multinational corporations with expanding wealth and power, the actual or imagined abuses referred to above may be expected to lead to intergovernmental agencies more effectively empowered to apply appropriate control. It is not unthinkable that the ultimate entry of the world into an era of international government may come by way of the intergovernmental economic agencies already developed or to be developed to deal with problems presented by the large international corporations. Such corporations could not be expected to supply such organization by their own actions unless they evolved toward intergovernmental ownership and operation; the conflicting political pressures that such a public corporation would face make it an unlikely development under foreseeable circumstances. Reduction in the fear that small nations have of large international corporations might be achieved also by disassociating these corporations from the great industrial powers, whose political and economic domination is a major source of the fear. Perhaps the most feasible way to accomplish this would be to require that such corporations be chartered by some intergovernmental organization such as the United Nations or the World Bank. To have the desired relaxing effect on small, developing countries, it would undoubtedly be necessary also to have intergovernmental control along the lines indicated above; such control would be facilitated by the requirement for international chartering. There would seem to be little valid objection to moving toward a treaty permitting international incorporation, and if enough developing countries in which international business strongly desired to invest were to join in demanding international incorporation for large foreign businesses operating within their countries, they might bring about acceptance and use of such incorporation. As yet, however, there seems to be little sentiment that intergovernmental incorporation would make a substantial difference in the position of the developing countries. Wall Street à New York. Contradictions plus algues entre le Capital et le Travail. III. LA SOCIETE MULTINATIONALE NE CHANGE PAS LE CARACTERE FONDAMENTAL DU CAPITALISME POUR tromper l'opinion publique, les théoriciens du capltalisme monopoliste d'etat présentent la société multinationale comme une institution établissant une intégration économique dépassant les frontières nationales, tout en respectant les souverainetés nationales et les cultures locales. Le but d'une société multinationale prônent-ils est économique, donc relativement facile à définir, à évaluer et a contrôler. Ils affirment souvent que le développement des sociétés multinationales ne peut être qu'un bienfait pour les travailleurs parce que l'augmentation permanente des niveaux de productivité permettra d'élever le niveau de vie des masses et d'accroître le propres social. Ces affirmations sont toujours accompagnées de fausses théories sur le changement du caractère du capitalisme, sous les vocables de "capitalisme dirigé", "capitalisme populaire", '"capitalisme moderne" etc. Une des théories, connue sous la notion "managerial revolution", prétend même qu'a l'heure actuelle les capitalistes ont pratiquement disparu en tant que propriétaires et dirigeants des entreprises, et qu'ils ont été remplacés par les directeurs (managers) qui. de par leur caractère, ne sont que des employés. La théorie "néo-libéraliste". tout en défendant le principe de la libre concurrence sollicite la coopération de toutes les couches sociales avec l'etat, qui veillerait automatiquement aux intérêts de la population. Contrairement à ce que prétendent toutes ces théories bourgeoises, le caractère du capitalisme n'a pas changé; STRATEGIE MONDIALE DE WESTINGHOUSE Le président de Westinghouse. Burnam, a constaté que ce trust s'appuyait á présent sur l'europe. El il se propose de prendre en même temps le contrôle de cinq affaires électriques européennes: Jeumont-Schnelder en France, les Ateliers de Construction Electrique de Charleroi en Belgique. Mareill et Tosl en Italie, et Cenemesa en Espagne. Les modalités de l'opération sont intéressantes, Sous la façade de la "multinationalité". il s'agit, pour les dirigeants de Westinghouse, de renforcer leur domination mondiale en contrôlant une partie importante de la construction électrique européenne. Extrait du supplément sur «les Syndicats face aux sociétés multinationales» inséré dans le n de mai-juin, 1971, du Bulletin «Mouvement Syndical Mondial» de la Fédération Syndicale Mondiale). 84 ASSOCIATIONS INTERNATIONALES, 1972

18 16e CONGRÈS MONDIAL - DUBLIN (IRLAN DE) R é s o l u t i o n I POUR DES COMMISSIONS D'ENTREPRISE INTERNATIONALE Le seizième congrès ord i na i re de la Federation Internationale dos employés et des techniciens (FIET), S'étant réunl è Dublin, du 19 au 22 octobre 1970, ès avoir p r i s connaissance de la conférence Intorprofosslonn e l l e "La FIET faco aux entreprises Internationales" q u i a réuni á Oslo, on J u i n 1970, cinquante-trois représentants de vingt-trois organisations affili ées, Après avoir discuté des résolutions do cette conférence, confirme, ce v i n g t - d e u x i è m e Jour d'octobre 1970, la résolution d'oslo visant à la création urgente d'une série do commissions chargées d'enquetes sur dos entreprises Internationales précises - actives dans l'industrie, le commerce, la banque ou les assurances - et occupant un nombre Important d'employés, t ec h n i c i e n s of cadres dans plusieurspays où la FIET compte dos organisations affiliées. Travaillant on collaboration avec les organisations a f f i l i é e s à la FIET, ces commissions seront, d'accord avec le comité exécutif de la fédération, disposées à tout moment à c o l l a b o r e r avec d'autres secrétariats professionnels internationaux et avec la Confédération Internationale des syndicats libres. Chaque commission fora rapport sur ses travaux au comité de sa section professionnelle, lequel est chargé de soumettre à l'exécutif de la FIET ses recommandations au sujet d'actions à entreprendre. As a result of the increasing integration and internationalisation of capital, the multinational companies have today become the basis of the capitalist system. They have a virtual monopoly in the application of new technology. Because of their stronger position in the capitalist sector of the world economy they are trying to find new ways of subordinating the rapid growth of productive forces to the needs of capital. These ways and means come into obvious conflict with the interests of the working people, and are therefore resisted by the working class, and the workers in general. (From «World Trade Union Movement», Bulletin of the World Federation of Trade Unions, May-June, 1971.) THE INCREASING Interdependence of national economies is the outstanding feature of recent economic trends, It is evident, however, that one byproduct of that interdependence is the possible emergence of economic and monetary instability at national levels, in the absence of any effective international control of the activities of world-wide economic power centres, national governments are bound to be seriously hampered in their efforts to cope with potential factors of Instability. The ability of multinational companies to take their profits where it best suits them, (-profit smoothoning-), the practice of - transfer pricing» and of switching large sums of internal funds from country to country, such as uncontrolled longterm direct investments for instance. or simply to delay or speed up the transmission of funds by - leads and lags». can have serious reporcussions on a country s balance of paymenu and effectively limit a government s power to deel with an adverse balance. Free labour and multinational corporations by Heribert MAIER The views of the International trade union movement on multinational corporations were conveyed by the Head of the Economic and Social Department of the ICFTU to the United States Congress on 28 July in Washington. The following article Is a shortened version of his testimony before the Congress Joint Economic Committee's Subcommittee on Foreign Economic policy. International trade continues to expand at a rate on average twice that of overall economic growth, but an increasing proportion of the International exchange of goods is accounted for by multinational companies. International trading rotations are changing in nature : foreign trade Is becoming more and more a matter of transfers between the parent company and/or subsidiaries of vast multinational corporations, Trade union concern Some of the financial and trading practices of multinational companies can raise serious problems for the successful implementation of government policies on domestic industrial development, taxation. Investment, active manpower and other economic adjustment action. All these are areas in which the trade unions have a vital interest since the welfare of their members and of the workers and their families In general is Inevitably at stake. Industrial development and active manpower policies, for example, include the whole complex of measures which governments should take to offset market dislocation. Such measures are essential not only for the maintenance of high levels of employment but are also a basic prerequisite for a valid alternative to protectionist policies which everyone agrees help nobody In the long run. Both governments and trade unions are interested In understanding the financial accounts of international companies the latter mainly from the point of view of labour costs, while governments «re also concerned in such questions as tax liability. In short, the trade unions are bound to view with considerable concern the growing encroachment Of multinational companies upon the sovereignty of the nation slate. While In different countries unions of varying tendencies may difter in the emphasis they place on particular aspects of that concern economic, cultural, psychological, political they all find It intolerable that those companies are able to take unilateral decisions affecting the earnings and Job security of workers In the countries where they operate decisions, that is, in which neither the government nor the trade unions can take part and which may bo motivated by considerations quite extraneous to the Interests of the country concerned. It should bo clearly understood. however, that the unions are by no means unaware of the positive aspects of the activities of multinational companies in respect of levels of employment and incomes, In particular, they welcome the potential benefit flowing from the application of new technologies, the Introduction of new growth factors. help in developing and expanding internal and export markets and in the speedier industrialisation of developing countries. In addition, they know that those companies could form an important factor in favour of general libéralisation policies to which the International labour movement is firmly committed. provided they are prepared to accept their full responsibilities towards the workers they employ and the societies In general in the framework of which they operate. The trade unions have, nonetheless. one specific cause for anxiety. Particularly in developing countries, multinational companies may sometimes actively encourage the government to favour anti-trade union measures, permitting or even assisting employers to refuse to recognise trade unions, and to enter into bona fide collective bargaining. The International free trade union movement believes that the governments of capital-exporting countries have not only a strong moral obligation, but also a practical material interest In ensuring that overseas Investment does not promote unfair labour conditions whi fire on their own coun ing the labour market. In this connection cently introduced by th government may bo o In that country export cover losses duo to p connection with inves tain developing coun tain so-called social c lay down that the inve should offer satisfacto work and employmen cognition for trade un within the firm, Needed an Interna code of behaviour The problems cal tional control in this c evidently multiple and They involve economi questions, trade union basic human rights, a blems of international ment and monetary af fore, clear that no sin mental agency could competent to deal with tion and application o International instrume regulate the operation national companies. T might well bo taken by it would bo natural an other agencies like G Bank, the internationa Fund and the UN Con Trade and Developme the OECD to Join in a to establish an interna INTERNATIONAL ASSOCIATIONS,

19 Governments preoccupations? (extract from «Sovereignty at Bay. The Multinational Spread of U.S. Enterprise, by Raymond Vernon, London, Longman, 1971). Home Country versus Host Country What governments profess to be concerned about, however, is not the outlook of the management of multinational enterprises so much as the results that follow from that outlook. In assessing results, three kinds of questions repeatedly emerge: (1) How does the multinational enterprise distribute its functions geographically especially such functions as production, exportation, and research? ( 2 ) How does the multinational enterprise distribute rewards between its subsidiaries, especially rewards that affect the level of local taxes? (3) How does the enterprise respond to governmental measurees aimed at increasing local benefits, such as requirements that the ownership of the subsidiary should be shared with local interests on a joint venture basis? AREAS OF CONFLICTS BETWEEN THE MULTINATIONAL FIRM AND THE NATION STATE The task of bullding this form of multinational social architecture is complex. The multinational firm can come into I severe conflict with the nation state In many areas. For many developing countries the multinational firm has in the pest represented colonial and/or exploitative practices as evidenced in a) a period of enforced managerial and technological backwardness by being raw material suppliers but not able to industrialise under colonial rule. b) a persistent policy of giving lower status and rewards to local personnel. c) their readiness to use military power to guarantee support of the company's policies. d) the tendency to prefer monopolistic practices in utilising the human and material resources of a country. While these practices ore. for the most part, not continued, there is a fear in both the former colonial territories as well as in developed countries that large multinational firms will abuse their power and come to control local persons and politics so that national Interests are made secondary to those of the multinational firm, and its great access to capital, power and knowledge. On the side of the firm them is the persistent concern that the host country will take over their hard-earned resources and facilities without warning and without compensation. There la a belief among senior executives that the total Interests of the firm and its efforts to survive in a world community make It necessary to consider as secondary the particularistic Interests of each sovereign state. For example, executives at the headquarters of a multinational firm are confronted by this kind of dilemma: should the company continue to support an unprofitable and inefficient manufacturing plant in country X because of the political threats of reprisal from the community affected (and which is wholly dependent on the foreign plant) or should the inefficient plant be closed down? The areas of conflict between the multinational firm and political leaders of host countries, generally speaking. stem from (a) the way of treating local citizens who are employees, (b) the use of the material resources of the country, (c) the degree to which the wealth created by the enterprise stays in the host country (through taxes, reinvestments, etc.). (d) the degree to which local consumer needs are satisfied by providing good* at reasonable prices and good quality, with good availability and service of these products. The political leader* of a country quite naturally (a) want credit for the social and economic development of their country (under some conditions they prefer not to acknowledge the dependency on foreign firms); (b) want to retain the power to allocate resources in order that the capabilities of the countries are developed in a balanced way and in the Interests of the country. A nation state which Is dependent on supplying raw materials to manufacturing plants outside the country, or which is making products which arc becoming obsolete at home and abroad. Is particularly vulnerable. Scientific advance in chemistry can. for example, make obsolete primary raw materials produced by the country, like cocoa, coffee, leather, cool, peanuts, cotton. The result for the local economy can be disastrous. There is an abiding and Increasing desire among political leaders both (1) to be able to control the fate of the country and not to permit arbitrary decisions being made at a distant headquarters disrupt the social, political and economic system of their country. (2) to protect their country against the likelihood of being rendered technologically obsolete. A central question of local political leader», and one directed at all transnational organisations. Is: "What can you foreigners do better that wo cannot do oursetves, now or In the long run?" Our observation is that there Is. on balance, a sense of distrust of multinational venture» and often even of those nationals who are willing to spend their lives in them. On the side of the senior executives of the multinational firm the areas of conflict are both similar and different While the attitudes towards resolving these conflicts will bo described below, the primary aims of the business enterprise to survive and to return a profit on the investment in the short and long term must be considered a» valid. Home office executives frequently have a suspicion that: (1) the local politicians are out to exploit (and maybe expropriate) parts of the multinational firm and (2) that politicians, by nature, are corrupt or corruptible end seek only personal gain rather than the interests of citizens of their country. This no doubt adds to the atmosphère of distrust encountered when representatives of these two groups meet to negotiate. (excerpt of an article on «Social Architectural Problems of the Multi- Composants Electroniques 86 ASSOCIATIONS INTERNATIONALES 1972 (reproduced from Litton Industries Inc Rapport Annuel). (excerpt of an article on «Social Architectural Problems of the Multinational Firm», by Howard V. Perimutter, published in the August, 1967 issue of the Quarterly Journal of AIESEC International).

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